Harmonized index of consumer prices
Updated: June 10, 2021
Next update: July 9, 2021
About the statistics
The Harmonized index of consumer prices (HICP) describes the development in consumer prices for goods and services from all kinds of private households (including tourists) inside the economic territory of a Member State. The HICP is compiled under an harmonized standard suitable to compare price developments between European countries. HICP figures for the country groups EU, EA and EEA, and individual country series are available from Eurostat. For more detailed information about the development in consumer prices for goods and services purchased by Norwegian households go to the Consumer Price Index.
Price refers to actual retail price of goods and services offered to households. This means prices including indirect taxes, fees and subsidies. Discount and sale prices are registered.
Price reference month defines the time of reference for new weights, updated sample and base prices used for calculation in the following year.
Budget shares are proportional to the consumption of a certain good and consumption in total in households. Expenditure shares are obtained from the consumption in household in National Accounts.
Seasonal goods are products that are only or to a small extent available at certain times of the year. Examples are fruit, vegetables and certain clothing products. Observed prices are used in season while out of season the prices are in most cases estimated.
Imputed price is a price estimated for a missing price based on other price observations of the same products.
A Laspeyre price index is a price index where the base-period weights remain fixed. A chained Laspeyres price index is an index linked by Laspeyres indices with different sets of weights. New sets of weights are incorporated into the index every year. A Paasche price index also uses fixed weights but, unlike the Laspeyre price index, the weights are from actual current period. A pure Paasche price index is not used in the CPI
A Fisher price index is a geometric mean of a Laspeyre and Paasche price index. The Fisher price index is used in the CPI for the index of motor vehicles and indices of alcoholic beverages sold through the State wine and liquor monopoly.
ECOICOP (European Classification of individual consumption by purpose) is a consumer classification developed by UN and EUROSTAT. The classification criteria is the end purpose of the consumption.
Euro-zone consists of EU Member States which participate in the Euro Cooperation; Austria, Belgium, Germany, Greece, Spain, France, Finland, Italy, Ireland, Netherlands, Portugal, Luxembourg, Cyprus, Malta, Slovakia, Slovenia, Estonia, Latvia og Lithuania.
EU - the European Union - consists of the Euro-zone Member States in addition to Denmark, Sweden, Croatia, Romania, Poland, Bulgaria, Hungary and Czech Republic.
EEA - the European Economic Area - includes all the EU Member States in addition to Norway, Iceland and Liechtenstein.
"Domestic concept" - HICP covers purchases of goods and services from all kinds of private households (including tourists) inside the economic territory of a Member State.
Indicator derived from the HICP
HICP-CT, harmonized index of consumer prices with constant taxes, is an indicator where the weights and the calculations are identical to the HICP. The HICP-CT is also based on actual, observed prices, but those are adjusted for nominal tax rates changes (except value added tax). The HICP-CT takes into account the following taxes:
1. Value added tax
2. Alcohol tax
3. Tobacco tax
4. Petrol tax
5. Diesel tax
6. Electricity tax
7. Taxes on mineral products
8. Chocolate tax
9. Tax on non-alcoholic beverages
10. Sugar tax
11. Tax on disposable beverage packing
12. Aviation tax, terminal and security charges
13. Purchase tax on vehicles, weight tax
14. Purchase tax on vehicles, piston displacement tax
15. Purchase tax on vehicles, motor effect tax
Name: Harmonized index of consumer prices
Topic: Prices and price indices
Division for Price Statistics
National level only.
Harmonized Indices of Consumer Prices for Norway are reported monthly to EUROSTAT.
Data on micro level, information about sample units, population, and catalogues are stored in SAS and Oracle databases.
The statistics is primarily designed for international comparisons of price development.
In 1991 the Treaty on European Union (the "Maastricht Treaty") laid down various convergence criteria that increased the demands for comparable price indices. An international cooperation started in 1993 where the objectives were to obtain comparable measures of price development. HICP was first published in 1997. HICPs are produced in all Member States in addition to Iceland and Norway.
The Norwegian HICP is founded on the Norwegian CPI for which the process of editing and the methods of calculations were modernized and improved in 1999, and the classification of consumption was changed to Classification of individual consumption by purpose (COICOP). In 2005 the sub-index for food and non-alcoholic beverages was improved, which resulted in a sub-index exclusively based on the use of electronic scanner data. From 2011 National Account data are the main weigh source and replaced the Household Budget Survey which had been used since 1960. From 2016 the classification of consumption was extended and are now named ECOICOP (European Classification of Individual Consumption by Purpose). In addition the classification of indices grouped by delivery sector is revised.
From 2011 National Account data are the main weigh source and replaced the Household Budget Survey which had been used since 1997.
The HICP has to a large extent the same users as the CPI, which are the public sector (ministries, the Bank of Norway) and the financial sector. Within Statistics Norway the HICP is used in the context of analysis and research. The Central European Bank is also an important user. The Eurozone index is used as a main indicator for monetary policy management for the Euro-zone. Statistics Norway report monthly the Norwegian HICP to Eurostat and the Norwegian publication of the HICP is considered preliminary until the Eurostat publication.
The population is defined as all goods and services offered to households in Norway. Prices and expenditure shares of a sample of products and services are being measured. Expenditure shares (weights) are based on data obtained from the National accounts, while prices are collected each month from a representative sample of retail and service outlets. This sample is selected from all outlets in Statistics Norway's Business Register defined as the industries 45, 47, 55, 56, 77, 95 and 96 (SIC07 -The Standard Industrial Classification). In addition, prices are collected with unequal frequency from different outlets or parties (including households) mainly on services within the industries 35, 49, 50, 51, 53, 60, 61, 65, 66, 69, 77, 79, 85, 86, 88, 90, 91 and 93. Household samples are selected from the "Central Population Register".
The sample of goods and services is nearly fully harmonized with the CPI sample. The cost for owner-occupied housing that consists of about 14 per cent of the CPI is not included in the HICP. In addition Games of chance and Live insurance is not included. Due restribution of the weights of these omissioned areas, the absolute weights at detailed level differs between the CPI and the HICP.
The HICP (and CPI) is based on the following sources: Questionnaires, electronic data from firms and dwellings, turnover information from Statistics Norway's Business Register, commodity trade statistics, and budget shares from the household budget survey.
A sample of about 650 goods and services is selected. In addition, scanner data is used as the only data source for for food and beverages together with non-food goods from supermarkets, pharmaceutical goods, fuel and within specific consumption groups in clothing and equipment for sport and open-air recreation.
Representative goods and services in the sample are selected based on information from the annual household budget survey and branch information. The sample of goods and services is basically kept constant, but is regularly updated when new important products enter the market while outdated products are removed. Prices are collected from a sample of outlets, households and municipalities. The outlets comprise a panel sample where one sixth of the outlets are replaced each year. The sample amounts to about 2 000 firms. The sample of households for the survey of rents amounts to 2 500 tenants. The outlets/firms are selected from Statistics Norway's Business Register in proportion to the firms turnover i.e. large firms have a bigger probability of being chosen. The selection is made after stratifying the population by industry and region. The probability to be selected is proportional to the size of the turnover. The sample does not overlap the sample of the Index of Retail Sales
The sampling plan for the food and non-alcoholic beverages index is based on the population in the Central Register of Establishments and Enterprises (CRE) defined as the industries in 47.11 and 47.12. The draft population consists of companies belonging to the major supermarket chains and their associated kiosk chains, provided that they can deliver scanner data. Parts of the sample are replaced each year to ensure a representative sample.
Another sampling methodology is used for sub-surveys directed towards municipalities (KOSTRA).
The main part of the prices are collected by means of electronic questionnaires, which are available to the outlets around the 10th of each month, and returned on the first working day after the 15th. Statistics Norway also receives electronic scanner data from grocery firms, retail pharmacies, sport- and clothing dealer's and petrol stations monthly. Car prices and price information on alcoholic beverages are received electronically. Tariffs on electricity are collected from the Internet. Rentals for tenants are collected by means of web questionnaires and CATI - Computer Assisted Telephone Interview - directly from households.
An outlet uses an average 90 minutes to fill out the questionnaires throughout the year, which means that the sample of outlets uses in total about 3 300 hours or less than 520 days of work each year.
Individual firms fill out the questionnaires. Firms who fail to comply receive a "notice of fine". To avoid paying the fine, firms must submit completed forms to Statistics Norway within 6 to 7 days.
After checking the questionnaires, the prices are thereafter put through tests, which identifies duplicates and observations with large price changes from the previous month. The price material are then sorted by item and region and further edited. Finally, prices are controlled at item level and item group level. Generally firms are not contacted during the editing process.
Indices at micro level are calculated for each commodity in each region (the country is divided into 8 different regions) by an unweighted geometric mean. Each regional index is then weighted into a national index for each commodity based on turnover shares. Aggregation to higher levels is done by the Laspeyre formula where the weights are based on the National Accounts. Weights are updated annually and price updated to the reference period. The price reference period is December and short-term indices are chained to long-term indices where the index reference period is 2015, i.e. 2015 = 100.
Data collected from firms and households are subject to secrecy and are to be kept or destroyed in a secure manner. Any use of the data must be in accordance with the rules set out by the Data Inspectorate.
Statistics Norway release monthly figures for Norway consisting of indices, monthly rate of change and 12-month rate. In addition weights and an annual growth rate is released. Eurostat publish all-item indices and several measures for rates of change for all the European countries countries each month. Eurostat also produces separate indices for EU, EEA and the Euro-zone. The all-item indices for each country go back to January 1996.
The questionnaires are formed in such a way that reported price for the last months is listed. This method is done to ensure that the prices of the same goods are given. However, outlets may of consideration of convenience copy the previous month's prices instead of the correct prices when filling out the questionnaires. The most obvious cases of this kind are revealed in manual checks carried out when receiving the questionnaires. When a good or service goes out of the market, the outlets are instructed to find a replacement and mark it in the questionnaire. If outlets report a price of the replacement without marking it, the difference in price between the old product and the replacement will incorrectly be registered as a price change of the old product. The extent of this error is unknown.
Non-response : Each month around 85 to 90 per cent of firms respond. The response increases to about 95 per cent after the process of reminding. Total and partial missing prices are imputed. There are four different algorithms used in estimating missing prices. Imputed prices are either based on the price changes or average prices of the same product in the region or the country as a whole.
Skewness : The sample of goods and services are updated once a year, where new products are introduced and replace old products. The sample of households in the household budget survey is also changed once a year to make the sample of households more representative. In the sample of outlets/ firms, one sixth of the samples are changed each year. Statistics Norway has not done any calculations on the skewness in the Norwegian CPI. International surveys indicate that the sample of goods and services is the source of the largest skewness.
Traditionally non-sampling errors in the CPI are divided into three main types of measurement errors;
a) Income effects which influences consumer behaviour through time;
Households through time face changes in income, which also affect the expenditure shares of different goods and services. To be able to set proper weights in CPI, in each period, the weights in the CPI should reflect the expenditure shares. Therefore the weights are updated yearly. There have not been any calculations done to measure errors caused by non-representative weights.
b) Price effects caused by changes in relative prices;
The price relationship between different goods and services changes over time. This changes also the expenditure share of households and causes the same measurement challenge as the income effects.
c) The unsatisfactory treatment of quality changes;
Statistics Norway has not accomplished separate calculations of these measurement errors in the Norwegian CPI. Calculation of measurement errors and analyses done in USA, Canada, Sweden and Great Britain estimate the measurement errors somewhere between 0.4 to 1.1 per cent measured as annual growth rate. However there are uncertainties in these estimates. Its likely to assume that the Norwegian CPI overestimates the development in the cost of living, but the level is likely to be less than one per cent measured as annual change.
HICP numbers are revisable.